Arizona ~ Corporate, Personal Income Taxes: Guidance Updated for Taxpayers Who Restore Substantial Amounts Held Under Claim of Right

CCH Tax Day Report

The Arizona Department of Revenue has updated its guidance on how individuals and corporations must recompute their Arizona income tax liability when restoring a substantial amount held under a claim or right. The guidance has been updated to include information on how to report the decrease in tax from a prior year’s return. For amounts repaid in taxable years beginning after December 31, 2015, a new Claim of Right form is available, and a line is provided on the tax return to report the claim of right credit amount. For amounts repaid in taxable years beginning before December 31, 2015, taxpayers must complete their own schedule showing each prior taxable year that included an amount repaid in the current year and the computation of the decrease in tax for each prior taxable year, and they must include the claim of right credit amount on the tax return line for “Total payments and refundable credits” (for individuals) or “Total payments” (for corporations) and write “A.R.S. 43-1029” (for individuals) or “A.R.S. 43-1130.01” (for corporations) on that line.

Individual Income Tax Procedure ITP 16-1, Arizona Department of Revenue, September 13, 2016, ¶401-332; Corporate Income Tax Procedure CTP 16-1, Arizona Department of Revenue, September 13, 2016, ¶401-333

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